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The Finance Ministry expects the economy to grow 4.1 percent in 2007, slower than its outlook of 5.3% growth for the rest of this year, the treasury said Monday as it presented next year's budget to the Knesset's Finance Committee.
Finance Minister Avraham Hirchson also expressed his determination to pass the budget before the end of 2006.
"We cannot have a situation where the Knesset delays passing the budget to next year," Hirchson said. "This budget is intended to reverse the trend and help the weaker segments of society by assisting them in finding work and breaking the poverty cycle."
Hirchson added that the ministry was aiming at achieving a budget deficit of 2% and that it would require more professional management of the country's finances to achieve this goal.
"The time has come to manage the country in a way one would manage a business," he said. "Every ministry must delve into their budgets and test where it can make cuts. For too many years the country threw away billions to education and relief activity while the situation deteriorated."
Hirchson added that the treasury would stand firm by the deficit goal it set and that any changes would need to be made in the framework of the budget.
The Finance Ministry, meanwhile, reported Monday that the government operated at a surplus of NIS 4.7 billion in the first half of the year compared to a NIS 1.3b. deficit in the parallel period last year. This despite a deficit of NIS 3.8b. in June that resulted mainly from interest payments of NIS 4.8b. and high seasonal expenses during the month.
Income from direct taxes last month was similar to that of June 2005 at NIS NIS 7.2b., but the ministry said that so far this year income tax collections were NIS 7b. more than in the first six months of 2005.
The government also collected NIS 5.6b. from indirect taxes such as VAT and customs taxes in June bringing the six month total to NIS 2.5b. - higher than last year.
This trend was expected to change slightly in the second half of the year after VAT was cut 1% to 15.5%, effective from July 1.
Over the last 12 months, the government has worked at a deficit of NIS 4.8b., the ministry said.